Divisions I and III of the Federal Court of Appeals in Civil and Commercial Matters have recently issued decisions finding DeRemate.com de Argentina SA (DeRemate) and Compañía de Medios Digitales CMD SA (CMD) liable for trademark infringement as the result of allowing the users of their e-commerce platforms to sell counterfeit NIKE goods. DeRemate was ordered to pay damages in the amount of AR$ 200,000 (USD 21,328) (Nike International v. DeRemate.com, decided on May 5, 2015), while CMD was ordered to pay AR$ 180,000 (USD 19,195) (Nike International v. Compañía de MediosDigitales, decided on May 21, 2015), in both cases plus interest.

In 2004, Nike alleged that DeRemate was violating its rights under Argentine trademark law by allowing its users to offer NIKE counterfeit products on its platform www.deremate.com.ar. However, negotiations were sought and the parties came to an agreement by which, among other things, DeRemate would remove illicit NIKE products upon notification. By 2008, Nike sought further action claiming that DeRemate was in breach of the agreement and that illicit NIKE goods were still being sold on the website. Therefore, Nike requested that DeRemate be ordered to cease any use of NIKE, including its use as a keyword, and to compensate Nike for damages.

On the same grounds and very similar facts, in 2007, Nike sought action against CMD which owns and operates the website www.masoportunidades.com.ar, in which counterfeit NIKE products were also being offered.

Both DeRemate and CMD maintained that (i) they were not responsible because they were neutral platforms which allowed third-party users to convene and carry out interactions; (ii) they refuted the notion that they were an online store; (iii) they denied owning any of the products sold on their websites; and (iv) they denied any participation in the transactions themselves.

Based on a recent decision from the Argentine Supreme Court, which was previously reported in the INTA Bulletin (also see Vol. 68 No. 14 and 17), Internet service providers (ISPs) like the defendants can be held liable for the behavior of a third party, and/or for the illicit content third parties upload to their platforms, once they have actual knowledge of the possible infringement and fail to correct the situation. The concurring dissent also raised a second scenario under which ISPs could be held liable; namely, when they are not just mere intermediaries but rather assume a more active role, as for example editing, modifying or directly creating the content.

Without express mention of the Supreme Court decision, both Divisions concluded that the defendants were not mere intermediaries but rather had an active role. Referencing the L’Oreal v. eBay case decided by the European Court of Justice (Case C 324/09, July 12, 2011), the Court of Appeals found that DeRemate had an active role, as it used the term “Nike” as a keyword redirecting users to its website and provided a payment method that facilitated the illicit transactions. The Court of Appeals also found that CDM had an active role because it helped to promote the products on its website and pointed out that it took a 5 percent commission on every transaction.

In the decision against DeRemate, the Court of Appeals said that the use of the well-known mark NIKE as a keyword in order to get users to its website was a trademark infringement because it created confusion among consumers and diluted the mark. This is the first case in which an Argentine court had to analyze on the merits whether the use of a mark as a keyword would actually be considered a trademark use.

In both cases, the Court also concluded that the rules and filters that CMD and DeRemate had in place to avoid counterfeits were insufficient, as in some cases the postings clearly identified the goods as “replicas”or “not original” and were not taken down.

Both decisions put in place certain obligations for the parties going forward. The defendants were to implement filters to eliminate blatant trademark infringements, while Nike had the burden of informing the defendants of those goods which would violate its rights. The Court demanded that the defendants take down infringing posts in a 24-hour period after receiving notification and to immediately send Nike the complete information about the user posting the infringing product.

Also important, the Court of Appeals denied Nike's petition to stop the sale of any NIKE products on the websites irrespectively of whether they were genuine or not, as the Court reasoned that the circulation of any products that were legally obtained could not be forbid-den to reenter the market place.

While the decision against CMD has become firm and final, DeRemate filed an extraordinary appeal before the Supreme Court which has not yet been granted certiorari.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.